When Jeremy Paxman blamed the Newsnight crisis on budget cuts at the weekend, it was not the first time he had taken management to task over the programme's funding.

Industry insiders said the budget of the BBC2 current affairs programme had dropped from more than £10m in the middle of the last decade to as little as £5m today. Others put its funding at a slightly higher figure.

Insiders said the programme's travails were down to "partly about the budgets, and partly about the people there". In its heyday, Newsnight had a separate film office where journalists would be able to work on long-term film projects away from the demands of the newsdesk dealing with the breaking issues of the day.

That divide has long since gone. "It used to be an intellectual powerhouse of a place," said one journalist. "The film office has less money than it used to have and is a less glamorous place to be, and there are lower expectations of what it is supposed to be doing. They don't have the budgets to make those big films they used to make, travelling all over the world."

Newsnight, which first aired on BBC2 in 1980, suffered 15% cuts in 2005. In an era when the BBC has introduced successive rounds of belt-tightening across its entire output, the programme's budget was cut by a further 20% in the runup to 2010.

Further budget cuts were pushed through earlier this year as part of the former director general Mark Thompson's latest cost-saving initiative, Delivering Quality First (DQF).

However, Newsnight remains one of the BBC's flagship news programmes, along with Panorama and Today, and has been protected from the deeper cost-cutting that has shed several thousand jobs from other areas of BBC News over the past decade. A total of 800 jobs are expected to go from a BBC News workforce totalling 5,000 as part of the latest DQF cuts.

Paxman first hit out in an interview to mark Newsnight's 25th anniversary in 2005. Given the scale of the savings required, said Paxman, if he were the editor he would have said "fine, we'll go to four nights a week instead of five. Frankly, reducing the number of staplers in the office isn't going to do it".

Paxman returned to the subject in 2007 during the prestigious MacTaggart Lecture at the Edinburgh TV Festival.

In the light of the crisis that has since engulfed Newsnight, his warning that the cuts were "unsustainable" appears prophetic. "Over the last three years we've been required to make budget cuts of 15%," he said at the time. "We have lost producers, researchers and reporters. Nor can we make the films we once made.

"Now we're told we are likely to have to make more cuts: at least a further 20% over five years. It is unsustainable, and I cannot see how the programme can survive in anything like its current form if the cuts are implemented.

"To get a single – important – film transmitted last week involved surviving a sustained barrage of astonishingly threatening lawyers' letters from Carter Ruck and ear-bending from one of the country's most expensive PR firms.

"You can't do that if you're replacing grizzled output editors with people on work experience, no matter how enthusiastic they may be."

He admitted it sounded like "special pleading" but said the "bigger question is whether the BBC itself has a future".

Fast forward to today and the programme's stable of producers, specialist correspondents and general reporters is far smaller. Newsnight had 15 correspondents in 2006 and could still count on seven general reporters in 2009, but lost three more reporter posts in the DQF cuts earlier this year.

"Newsnight has suffered quite a lot," said one industry source. "There are a lot fewer reporters and producers. It's not just about the numbers, it's also about the status of the people who are there. There was a day when Newsnight reporters were Evan Davis and Martha Kearney and David Lomax and Michael Crick. Today it has far fewer of those big-name people."

Such was the scale of concern among staff on the programme that in 2007 they wrote to the editor at the time, Peter Barron, who is now at Google, refusing to co-operate with the cost-cutting drive in which all of the staff reporters were asked to reapply for their jobs.

"Most of the budget on Newsnight and programmes like it is fixed costs, studio time and other things, so it inevitably means when you get a big cut in its budget it has to come out of its journalism," said another industry source.

The programme's newly appointed acting editor, Karen O'Connor, is described by people who know her as an "extraordinarily strong character, very charismatic, and someone who people can rally to".

A former deputy editor of Newsnight and Panorama, she is currently the BBC's head of London factual. "She cares about Newsnight, she'll fight for it," said a source. "She is really quite ferocious – but in a good way – and she'll be able to deal with the big characters on the programme. If anyone can persuade Jeremy [Paxman] to get back on board, then Karen can."